FIN 315 ch.2

T/F: operating cash flow includes capital spending and working capital requirements

false

if a firm's net working capital is $120 in 2014 and $100 in 2013, then the change in net working capital is:

+ 20

suppose your company's taxable income is 235,000. (using table 2.3) calculate the income tax due, the average tax rate, and the marginal tax rate

74,9000; 32%; 39%

assets can be described as items that:

a firm owns; generate revenue; provide market value to the firm

which of the following are classified as liabilities on a firms balance sheet?

accounts payable; notes payable

examples of short-run fixed costs?

building insurance; office rent

which are true concerning product costs?

contain both fixed and variable costs, reported as COGS

which of the following is an example of a non-cash item on an income statement?

depreciation

accounting profit _____ cash flows

differs from

cash flow identity reflects the fact that:

from the firms assets equals the total of cash flow to creditors and cash flow to stockholders; either used to produced the product or service,, pay creditors or pay out to the owners of the firm; a firm generates cash through its various activities

which is true about the difference between the income statement and cash inflow and outflows?

income taxes are often deferred; cost of raw materials purchased on credit are acc. payable rather than cash outflows; sales on credit are acc. receivable rather than cash inflows

which of these are generally considered to be short-run fixed costs?

management salaries; management bonuses; rent payments

which complies with GAAP?

matching revenues with expenses

_____ income is money earned after interest and taxes

net

residual value is the amount left over after paying ________

preferred stockholders; bondholders; accounts payable; other debt holders

two classifications of costs that, in practice, financial accountants tend to classify:

product costs; period costs

what does stockholders equity represent?

residual claim against the book value of the firms assets

which of the following are included in the fixed asset portion of a balance sheet?

trademarks; accumulated depreciation

marginal tax rates are the most important tax rates because

financial decisions are usually based on new cash flows; incremental cash flows are taxed at marginal tax rates

a company's ____ cash flows reflect whether its cash flows from business operations can cover its everyday cash outflows

operating

under a flat-rate tax, all income levels are taxed at ____

same average rate; same marginal rate

what is depreciation?

systematic expensing of an asset based on the assets estimated life

book value assets is generally:

not what the assets are actually worth

increasing its non-cash liquid assets will enable a firm to do which of the following?

increase ability to meet short-term obligations; increase its ability to avoid financial distress

period costs are the costs that are allocated to a specific _____

interval of time

which of the following are fixed assets?

land, plant, patents